Stokus v. Marsh

• Decision Date: 29 January 1990
• Docket Number: No. A045353,A045353
• Citation: 217 Cal.App.3d 647,266 Cal.Rptr. 90
• Court: California Court of Appeals Court of Appeals
• Parties: Lawrence V. STOKUS, Plaintiff and Respondent, v. John W. MARSH, Defendant and Appellant.

Page 90

266 Cal.Rptr. 90

217 Cal.App.3d 647

Lawrence V. STOKUS, Plaintiff and Respondent, v. John W. MARSH, Defendant and Appellant.

No. A045353.

Court of Appeal, First District, Division 2, California.

Jan. 29, 1990.

[217 Cal.App.3d 649] Andrew J. Wiegel, San Francisco, for plaintiff and respondent.

Daniel J. Buchalter, Kaplan & Kaplan, San Francisco, for defendant and appellant.

KLINE, Presiding Justice.

INTRODUCTION

Following a verdict in favor of plaintiff-landlord Lawrence Stokus in a protracted action for unlawful detainer in the municipal court, the trial court awarded plaintiff attorneys' fees of $75,000 against defendant John Marsh. Upon certification by the San Francisco Superior Court, we ordered the appeal transferred to this court pursuant to section 911 of the Code of Civil Procedure, in order to settle two important questions of law regarding the award of attorneys' fees pursuant to Civil Code section 1717: first, whether the municipal court may award attorneys' fees which exceed the $25,000 jurisdictional limit of that court and, second, whether such an award may include fees for services rendered prior to filing of the complaint. Answering both questions in the affirmative, and finding the $75,000 fee award reasonable, we affirm the judgment. ¹

STATEMENT OF CASE AND FACTS

In all, plaintiff filed three complaints for unlawful detainer against defendants. The first eviction notice was served on Marsh and codefendant John Arndt on April 29, 1986. A second was served on May 6, 1986. On June 3, 1986, defendants brought an action in the superior court for wrongful eviction, seeking actual damages according to proof, special damages of three times Plaintiff filed a second unlawful detainer action on March 9, 1987, based on a notice terminating tenancy served February 6, 1987. Defendant contended the notice was served one day prematurely and plaintiff voluntarily dismissed that action without prejudice on May 27, 1987, the day before hearing on a summary judgment motion brought by defendants. In the interim, substantial discovery was conducted and trial preparation undertaken. On May 29, 1987, plaintiff refiled the third and final unlawful detainer action based on the February 1987 eviction notice. Following a three-week jury trial, the jury found in favor of plaintiff and awarded possession and $6,166 in damages. The municipal court subsequently awarded plaintiff $75,000 attorneys' fees under Civil Code section 1717 pursuant to a provision in the lease agreement authorizing such fees.

                actual damages, plus $500,000 punitive damages.  On August 14, 1989, defendants initiated a second similar action including allegations of wrongful conduct by plaintiff occurring after initiation of defendant's wrongful eviction action.  The two superior court actions, which were consolidated, were ultimately dismissed and are the subject of a separate appeal.  (No. A042592.)   In August 1986, plaintiff initiated the first unlawful detainer action against defendants for failure to comply with the second eviction notice.  Defendants successfully moved to quash service of summons in that action, based upon defects in the notice under the San Francisco Residential Rent Stabilization and Arbitration Ordinance of June 12, 1979
                

DISCUSSION

I.

Marsh contends that the trial court erred in awarding attorneys' fees in an amount exceeding the $25,000 jurisdictional limit of that court. We disagree.

The municipal court has original jurisdiction "[i]n all proceedings in forcible entry or forcible or unlawful detainer where the whole amount of damages claimed is twenty-five thousand dollars ($25,000) or less." (Code Civ.Proc., § 86, subd. (a)(4).)

Invoking Civil Code section 1717, which provides in pertinent part that "[r]easonable attorney's fees shall be fixed by the court, and shall be an element of the costs of suit," plaintiff sought and was awarded attorneys' fees as costs, not as damages. This treatment of the fee request was correct. " '[R]easonable attorneys' fees, like interest, may be treated as part of costs and hence can fall outside the substantive demand of the complaint. Accordingly, a demand for reasonable attorneys' fees may be deemed a demand for costs, which need not affect the jurisdictional limits of a court.' " (Bakkebo v. Municipal Court (1981) 124 Cal.App.3d 229, 235, 177 Cal.Rptr. 239, quoting Babcock v. Antis (1979) 94 Cal.App.3d 823, 832, 156 Cal.Rptr. 673.)

Pointing out that the "substantive demand is the touchstone of jurisdiction," the court held in Bakkebo that where the recovery on the substantive demand is within the jurisdiction of the municipal court, "that court retains jurisdiction to award costs and attorney fees even though those items, when added to the substantive portion of the judgment, aggregate an amount in excess of the jurisdictional limit." (Id., at p. 235, 177 Cal.Rptr. 239; accord Babcock v. Antis, supra, 94 Cal.App.3d 823, 156 Cal.Rptr. 673.)

In Bakkebo, the municipal court had initially awarded the plaintiff damages plus $1,200 in attorneys' fees. (124 Cal.App.3d at p. 232, 177 Cal.Rptr. 239.) The appellate department of the superior court reversed the judgment as potentially exceeding the jurisdictional limit of the municipal court, which at that time was $5,000. In an opinion published under the caption Babcock v. Antis (1979) 94 Cal.App.3d 823, 156 Cal.Rptr. 673, the Court of Appeal held that the appellate department had erred in finding a lack of jurisdiction and the matter was remanded to the appellate department to consider the appeal on its merits. (See Bakkebo, supra, 124 Cal.App.3d at pp. 232-233, 177 Cal.Rptr. 239.) On remand, the appellate department awarded plaintiff $669.42 as additional attorneys' fees for services rendered on appeal. Plaintiff was then awarded an additional sum of $5,420.58 in attorneys' fees by the municipal court. The appellate department vacated this additional award and plaintiff appealed.

The plaintiff's essential contention in the second appeal was that the appellate department erroneously concluded it was constrained by the $5,000 jurisdictional limit of the municipal court. The Court of Appeal upheld the appellate department's award as "eminently reasonable ... though based on an erroneous theory." (Bakkebo, at p. 236, 177 Cal.Rptr. 239.) The court concluded that the appellate department need not have limited the plaintiff's total award to $5,000 and that the municipal court retained jurisdiction to award costs and reasonable attorneys' fees even though the sum of those items and the substantive judgment exceeded the jurisdictional limit. (Id., at p. 235, 177 Cal.Rptr. 239.)

In dicta, however, the Bakkebo court also cautioned: "In reaching our conclusion, however, we emphasize that we are speaking of attorney fees as costs and incidental to the judgment. Hence, any award for such fees must be reasonable and bear some rational relationship to the amount of the substantive recovery, and the award for attorney fees cannot in itself exceed the jurisdictional limit." (Id., at p. 236, 177 Cal.Rptr. 239.)

The Court of Appeal upheld the superior court's vacation of the additional $5,420.58 awarded by the municipal court on the grounds that it was neither reasonable nor incidental to the judgment. (Id., at p. 236, 177 Cal.Rptr. 239.) The court found that plaintiff's claims for fees "were clearly excessive." Finally, the court held that the award of the appellate department was reasonable. (Ibid.)

Relying upon the statement in the Bakkebo opinion that we have italicized, Marsh argues that the instant fee award impermissibly exceeded the jurisdiction of the municipal court. We agree with the appellate department's characterization of the this portion of Bakkebo as "clearly dicta, without precedent, and not binding on this court." The holding of Bakkebo that the additional $5,420.58 awarded by the municipal court was improper was not based on a jurisdictional determination but on the ground that the amount was unreasonable.

Several considerations, exemplified in this case, persuade us that the municipal court must be permitted to award fees in excess of its jurisdictional limit where it is reasonable to do so.

Like the Bakkebo court, we view the jurisdictional limit of Code of Civil Procedure section 86 as applying to the substantive judgment and not the award of costs, including reasonable attorneys' fees. Because attorneys' fees under section 1717 are awarded as costs rather than as part of damages, our conclusion does not contravene Code of Civil Procedure section 86. As the jurisdictional limits do not apply to the aggregate award of damages plus costs and fees, confining fees reasonably incurred to the $25,000 jurisdictional limit would be arbitrary, as that sum may bear no necessary relation to the fee reasonably incurred in a particular case. The plaintiff in this case did not have a choice of forum, as an unlawful detainer action can only be maintained in the municipal court. (Code of Civ.Proc., § 86, subd. (a)(4).) ² Though it is doubtless true litigants ordinarily incur smaller fees in municipal court than in superior court, there is no reason the forum should control the amount of fees that can be deemed reasonable.

If, as defendant maintains, a judge of the municipal court could not award fees in excess of that court's jurisdictional limit, an unprincipled or misguided litigant could economically intimidate an adversary by forcing him to incur legal expenses beyond the relatively low figure that could be awarded. Because the threat of such inordinate expense might otherwise induce a party to abandon resort to the court to resolve a meritorious claim, the possibility of a fee award in excess of the jurisdictional amount may be essential to preserve the court's jurisdiction. Though the record does not fully establish that defendant conducted this case in a manner consciously designed to intimidate plaintiff, it...